By Mark Dubow, MSPH, MBA, Senior Vice President, The Camden Group
Can you hear it? Can you feel it? The buzz about disruptive change and how it is already transforming healthcare is everywhere. The proactive entry of Apple, Google, Walmart, CVS, HealthSpot, Scanadu, IBM, and many others into healthcare is highlighted in daily social media feeds, industry news summaries, healthcare journals, and business newspapers.
The Leading Edge of Disruptive Change
Hundreds of entrepreneurial companies fueled by significant investments (private equity, health plans, commercial companies, some health systems), and leveraging technologic breakthroughs are bringing to market new products and processes that are disrupting traditional forms of clinical care and patient-provider relationships. Their presence is accelerating a change in provider roles and the location of care, and thus has significant economic consequences for hospitals, physician organizations, and other providers. This has the potential to create substantial strategic opportunities for providers that get out on the front edge of the wave. A failure to take notice and have a plan of action could leave your organization on the sidelines or marginalized.
Disruptive change involves a modification in a service, product or process that breaks apart old, existing relationships/arrangements and value equations and creates new ones. Three examples illustrate recent disruptive change:
- Use of smart phones by owners to self-monitor and transmit health information (i.e., heart rate and electrocardiogram, images of the inner ear, blood glucose level, dermatology scans) to physicians enables patients to have a direct role in diagnosing and managing their health, eliminates their need to travel to physician offices and emergency rooms for evaluation, and thus changes the patient–provider relationship and reduces both out-of-pocket costs for the patient and income for the provider.
- Laboratory companies will begin to invite customers to go online to pay for tests, direct them to a service center to have blood drawn, and provide access to results on the Web. This will alter the role of physicians and hospitals in diagnostics and the associated funds flow.
- Integrating an individual’s genome profile, national databases on treatment and outcomes, and predictive analytic algorithms enables the personalization of treatment thus changing the use of medical and surgical care thereby altering the economics of care for patients, providers, employers, and health plans.
The principle “drivers” of disruptive change in healthcare are:
- Technologic innovation (i.e., mobile health, telehealth, genomics and molecular biology- driven personalized care, bionics and 3D printing, predictive analytics)
- An orientation to “on-line everything”
- Entrepreneurs seeking a piece of the nearly $3 trillion healthcare market (i.e., start-up companies with new solutions, entry of retail pharmacies and “big box” stores into healthcare delivery, diversification of telecommunications, IT and data base companies into healthcare)
Powerful Strategic Initiatives: A Scenario
The following scenario illustrates how a provider organization could leverage just a few of the new products and processes to support their existing initiatives and achieve substantial strategic and financial benefits. The hospital/system enters into a regional exclusive relationship with Apple (HealthKit), Scanadu (Scanadu Scout, a medical tricorder), and Google (data warehousing and sharing). The collective patient monitoring and care management capabilities are applied through its patient centered medical home and embedded in the protocols specific to its bundled payment arrangements. They are implemented in collaboration with new patient access point partners (clinics, urgent care centers) dispersed throughout the service area and by the clinical staff of a newly formed preferred provider post-acute care network. Patients self-monitor and/or are “seen” by nurse practitioners and physician assistants (in collaboration with physicians), enabling their care to be coordinated across the continuum and managed in the lowest cost settings appropriate. Medical staff members remotely “staff” HealthSpot telehealth kiosks placed in selected Rite Aid stores. The collected outcome is a newly established virtual provider network consistent with population health that has a geographic footprint surrounding competitors and extending to outlying portions of the service area without having to build or buy “bricks and mortar” sites. All established through the use of the resources of strategic partners minimizing capital investment and speeding time to market.
Can you afford to wait and watch while a competing provider, a major payer, or an employer consortium leverages disruptive change and by-passes your organization?
Four Keys to Embrace Disruptive Change
2015 is the time to embrace disruptive change and identify the opportunities it presents. To get started, you must address the following:
- Educate your management team, board, and medical staff on the disruptors and the implications.
- Designate an individual to lead your organization in identifying and capitalizing on disruptive change initiatives.
- Answer the key questions:
- “Which disruptive changes are most relevant to the future of health services in this market and for my organization?
- What is the upside benefit to us? How do the new products, processes, and companies fit with and enhance the execution on our organization’s fee for value and population health initiatives?
- What are the consequences of the missed opportunity?
- Determine the role of your organization by answering:
- What capabilities and competencies do we need to take advantage of the disruption? Do we possess them or should we seek to collaborate/partner with a company(ies) leading the change?
- What criteria should be used to identify, screen, and select a partner(s)? What compelling value proposition can we “pitch” to prospective partners?
Capitalizing on disruptive change and the inherent strategic opportunities is so critical it should be a distinct goal and set of actions in your strategic plan and have assigned accountability. The time to take action is now…the countdown clock is ticking on this window of opportunity.
For a more detailed profile of disruptive change and the entrepreneurial companies driving this evolution, please download The Camden Group’s Disruptive Change and Strategic Opportunities by clicking the button below.
Mr. Dubow is a senior vice president of The Camden Group with more than 29 years of healthcare consulting experience. He assists healthcare organizations throughout the nation including acute-care hospitals, teaching hospitals and academic medical centers, ambulatory care providers, post-acute care organizations, health plans, and physician organizations. Mr. Dubow guides those organizations in determining their strategy in light of healthcare reform and in establishing the most appropriate model of care to apply as they transition from a fee-for-service to a fee-for-value environment. He may be reached at firstname.lastname@example.org or 310-320-3990.